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 Bernanke in a speech late Monday reiterated what investors know, that the risk of inflation has increased with rising oil and other commodities prices. But he also believes that the chances of a substantial downturn in the economy has fallen, and that raised Wall Street expectations the central bank might soon be comfortable in raising interest rates.
The central bank is worried that escalating commodities prices might curb consumers' appetite to buy discretionary items. This would pose a serious threat to the U.S. economy, as consumer spending accounts for more than two-thirds of economic activity.
So far, the biggest worry has been oil -- which climbed to a record high $139.12 a barrel on Friday. Crude futures on Tuesday rose 37 cents to $134.77 in premarket trading on the New York Mercantile Exchange.
Bernanke's comments caused selling overnight in Asia, where the Nikkei 225 average closed 1.1 percent lower. In Europe, Britain's FTSE 100 index lost 0.7 percent, Germany's DAX 30 index gave up 1.2 percent, and the French Cac-40 index declined 1.1 percent.
Dow Jones industrial average futures fell 85, or 0.67 percent, to 12,210. Standard & Poor's 500 index futures fell 10.20, or 0.75 percent, to 1,353.50, and Nasdaq 100 index futures shed 18.00, or 0.91 percent, to 1,969.75.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.04 percent from 3.99 percent late Monday.
The dollar rose against other major currencies, while gold prices also rose.
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 In other economic news, the Commerce Department will release its monthly report on international trade in goods and services at 8:30 a.m. EDT. Economists expect the U.S. trade deficit increased slightly in April due primarily to oil prices. The trade gap is forecast to rise to $59.5 billion from $58.2 billion in March, according to economists surveyed by Thomson/IFR.
Dallas Federal Reserve Bank President Richard Fisher and Federal Reserve Board Gov. Frederic Mishkin are both scheduled to speak on Tuesday.
In corporate news, Texas Instruments Inc. narrowed its second-quarter revenue and earnings expectations late Monday. However, the chip maker stayed within Wall Street's expectations.
Intel Corp. is gaining market share over rival Advanced Micro Devices, according to ThinkPanmure analyst Vijay Rakesh, who initiated coverage of Intel at "Buy." He said the company is gaining prominence in the server, desktop and notebook markets.
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On the Net:
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[Associated Press; By JOE BEL BRUNO]
Copyright 2008 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
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